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Reuters
20-05-2025
- Business
- Reuters
China cuts key rates to aid economy as trade war simmers
BEIJING, May 20 (Reuters) - China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world's No. 2 economy softens, while still protecting commercial lenders' shrinking profit margins. The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0% , while the five-year LPR was reduced by the same margin to 3.5%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. The lending rate cut was announced just after five of China's biggest state-owned banks said they have trimmed their deposit interest rates. Industrial and Commercial Bank of China ( opens new tab, Agricultural Bank of China ( opens new tab, China Construction Bank ( opens new tab and Bank of China ( opens new tab reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. Reuters had reported on Monday that the banks planned to cut their deposit rates from Tuesday. The deposit rate reductions should guide smaller lenders in making similar cuts. Banking shares edged higher following the rate decision, with the CSI Bank Index (.CSI399986), opens new tab rising 0.7%, outperforming the benchmark Shanghai Composite index (.SSEC), opens new tab. Marco Sun, chief financial market analyst at MUFG Bank (China), said the dual rate cuts were aimed at boosting credit lending and stimulating consumption. "The central bank is likely to switch to a wait-and-see approach in coming months unless external geopolitical risks deteriorate enough to extinguish hopes that the economy can stabilise," Sun said. Tuesday's rate cuts were a pre-emptive move, said Xing Zhaopeng, senior China strategist at ANZ. "One purpose is to repair commercial banks' net interest margin and get prepared for the future," Xing said, expecting one more rate cut by the end of July. The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war. Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. "We still believe it will be quite challenging for Beijing to achieve its 'around 5%' growth target unless it rolls out a sizable stimulus package," Ting Lu, chief China economist at Nomura, said in a note this week. "Considering the respite on the trade war, Beijing might be under less pressure to introduce the necessary stimulus and reforms." Recent economic readings show growth remains patchy and lacklustre. China's new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers' efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month.
Reuters
08-04-2025
- Business
- Reuters
China, Hong Kong stocks rise with regional markets, Beijing support
HONG KONG, April 8 (Reuters) - China and Hong Kong stocks rose on Tuesday, steadying in the wake of stronger regional markets and government-led support after a brutal selloff triggered by concerns over trade tariffs. China's blue-chip CSI 300 Index (.CSI000300), opens new tab climbed 0.2% and the Shanghai Composite Index (.SSEC), opens new tab gained 0.3% in early trade, after both slid more than 7% on Monday. Hong Kong's Hang Seng Index (.HSI), opens new tab jumped 2% after experiencing its steepest decline since the 1997 Asian financial crisis, while the Hang Seng Tech Index added 4.5%. Beijing has publicly stepped up efforts to stabilise the market after U.S. President Donald Trump slapped a 34% tariff on China last week. China has since responded with 34% levies on U.S. imports. Sovereign fund Central Huijin Investment, dubbed the "national team", said it has bought China-listed shares via exchange-traded funds and will continue to increase holdings to "safeguard the smooth operation of the capital market." Several Chinese state holding companies have followed suit and vowed on Tuesday to increase share investment, while a slew of listed companies announced share buy-backs to support prices. Prior to Tuesday's rebound, the blue-chip CSI 300 and the Shanghai Composite Index both plummeted over 7%, while Hong Kong's Hang Seng Tech Index (.HSTECH), opens new tab dropped nearly 19% since Trump's "Liberation Day" tariffs threatened to disrupt global trade and potentially trigger a global recession. Sentiment largely stabilised in Asia trading on Tuesday with major markets starting to claw back recent heavy losses. Japan's Nikkei 225 index (.N225), opens new tab rose 6% in a broad rally, while MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was 0.1% firmer.
Reuters
07-04-2025
- Business
- Reuters
China sovereign fund Huijin buying domestic stocks as market slumps
SHANGHAI, April 7 (Reuters) - China's sovereign fund Central Huijin Investment said on Monday it is increasing holdings in China stocks and will defend market stability - comments that follow a slide in local shares amid fears a widening trade war will unleash a deep recession. Huijin said it is "firmly optimistic about the development prospects of China's capital market and fully recognizes the current investment value of A-shares." The state fund has added China-listed shares via exchange-traded funds (ETFs), and will continue to increase holdings in the future to "safeguard the smooth operation of the capital market," Huijin said in a statement. The Shanghai Composite Index (.SSEC), opens new tab slumped 7% on Monday in its worst day in five years as investors dumped shares across the board after the U.S. imposed more tariffs on China which then fired back with its own levies. Asian markets were heavily sold off on Monday, adding to losses last week as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans that threaten to fuel inflation, disrupt global supply chains and trigger a global economic slowdown.
Reuters
12-03-2025
- Business
- Reuters
Euro surges on Ukraine ceasefire proposal, tariffs squeeze stocks
SINGAPORE, March 12 (Reuters) - The euro was riding at five-month highs on Wednesday on Ukraine's readiness to accept a month-long ceasefire, while stocks whipsawed on back-and-forth U.S. tariff plans and concern about a U.S. economic slowdown. European equity futures jumped 0.8% and FTSE futures rose 0.3% after the U.S. said it would restore military aid and intelligence sharing to Ukraine after Kyiv said it would accept a U.S. ceasefire proposal. Russia is yet to respond. The euro hit its highest since October in New York trade at $1.0947 and was steady at $1.0913 in the Asia session. Russia's rouble rose to a seven-month high overnight. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.2% with markets in Hong Kong (.HSI), opens new tab and China (.SSEC), opens new tab broadly steady and Japan's Nikkei (.N225), opens new tab holding its ground after slumping to a near six-month low a day earlier. On Wall Street overnight the S&P 500 (.SPX), opens new tab flirted with notching a 10% fall from February's record closing high, and finished a volatile session about 0.8% lower. President Donald Trump threatened then backed down from a doubling of steel and aluminium tariffs on Canada to 50%, after Ontario suspended plans for a surcharge on exported electricity. The dollar has sunk, Treasuries have rallied and lately stocks have suffered their heaviest selling in months as traders worry tariffs and policy uncertainty will hurt U.S. growth. "He's clearly trying to rebalance the economy back in favour of America," said Catriona Burns, lead portfolio manager of a global fund at Wilson Asset Management in Australia. "In this interim bit at the start, where he's going hard, it's a very dynamic environment to be operating in," she said. "The uncertainty that the tariffs and the back-and-forth on them is creating is hindering decision making ... so the effect that has in terms of a short-term pocket for the U.S. and an impact on growth there will be really interesting." Travel stocks took a beating after Delta Air Lines (DAL.N), opens new tab cut its profit forecast in half and rivals United (UAL.O), opens new tab and American Airlines (AAL.O), opens new tab warned of deteriorating results, falling government bookings and uncertainty weighing on demand. Investors nervous about the economy also punished downbeat financial results from retailers, with Dick's Sporting Goods stock (DKS.N), opens new tab diving 5.7% on a dour outlook and Kohl's Corp (KSS.N), opens new tab shares plummeting 24% after reporting a drop in sales. Steel and aluminium tariffs take effect later in the day. U.S. inflation data for February is also due, though it is likely to be too early to show much of a tariff hit. A central bank meeting in Canada will be closely watched to see what monetary policymakers on the front line of Trump's trade war are thinking. A seventh consecutive rate cut -- seen as only an even chance two weeks ago -- is priced in to the market. The Canadian dollar hit a one-week low overnight before recovering to C$1.443 per dollar. U.S. equity futures were broadly steady. The yen inched down from a five-month high to trade around 148 per dollar. The risk-sensitive Australian dollar was pinned just below 63 U.S. cents and Brent crude futures were held just under $70 a barrel.
Reuters
04-03-2025
- Business
- Reuters
China, Hong Kong stocks dip as US tariffs loom; NPC in focus
SHANGHAI/SINGAPORE, March 4 (Reuters) - China and Hong Kong stocks slipped on Tuesday, as new U.S. tariffs on Chinese imports were set to take effect, while investors awaited the upcoming annual parliamentary sessions to gauge Beijing's policy path. China's blue-chip CSI300 Index (.CSI300), opens new tab edged down 0.3% by the midday break and the Shanghai Composite Index (.SSEC), opens new tab traded roughly flat. Hong Kong's benchmark Hang Seng (.HSI), opens new tab eased 0.5%. U.S. President Donald Trump reaffirmed on Monday that he would increase tariffs on all Chinese imports to 20% from the previous 10% levy to punish Beijing for failing to halt shipments of fentanyl to the U.S. The tariffs were expected to take effect at 0501 GMT on Tuesday. The cumulative 20% duty also comes on top of tariffs of up to 25% imposed by Trump during his first term on some $370 billion worth of U.S. imports. "What would be interesting to see is the response by China itself ... because so far the stance has been quite restrained in response to the 10% tariff put on last month," said Moh Siong Sim, a currency strategist at Bank of Singapore. Sim was referring to China's relatively modest retaliatory tariffs and the yuan's stability which the authorities have maintained through the daily official fixing. But he cautioned that this approach might shift with the implementation of additional tariffs. China's Commerce Ministry vowed on Tuesday to retaliate against the fresh tariffs, reiterating its stance that the Trump administration was trying to "shift the blame" and "bully" Beijing over fentanyl flows. China's defence (.CSI399973), opens new tab and gold-related shares (.CSI931238), opens new tab rose around 3% and 2%, respectively, while agriculture stocks (.CSI000949), opens new tab edged down. The new tariffs coincide with the start of China's National People's Congress (NPC) on Wednesday, where Beijing is expected to roll out its 2025 economic priorities. Beijing was expected to maintain its economic growth target at roughly 5% and announce a budget deficit of 4% of GDP. Eva Lee, head of Greater China Equities at UBS Global Wealth Management, said that before the latest tariffs were announced, expectations for the NPC meeting were not high. "Now they announced the 10% and then swiftly implemented that, so that might put more ... you can say pressure on the China side to do more at the NPC meeting," Lee said. Shares of Chinese electric vehicle maker BYD slumped nearly 4% after the company said it had raised $5.59 billion in a primary share sale at a discount to its Monday closing price.
